Business Context and Reporting Period
This Form 8-K, filed on May 19, 2017, by Becton, Dickinson and Company (BD), reports on significant capital market activities related to its proposed acquisition of C. R. Bard, Inc. (Bard). The filing details the early tender results for Bard's outstanding notes and the execution of new underwriting agreements for substantial debt offerings in both U.S. dollars and Euros.
Key Financial Metrics and Capital Structure
The filing outlines specific debt instruments and funding amounts rather than operational financial metrics like revenue or profit.
- Exchange Offer Targets: BD announced early tender results for Bard's $500.0 million 4.400% Notes due 2021, $500.0 million 3.000% Notes due 2026, and $149.82 million 6.700% Notes due 2026.
- U.S. Dollar Notes Offering: BD entered into an agreement to sell approximately $9.675 billion in aggregate principal amount of new notes, including:
- $725.0 million 2.133% Notes due 2019
- $1.0 billion 2.404% Notes due 2020
- $1.8 billion 2.894% Notes due 2022
- $500.0 million Floating Rate Notes due 2022
- $1.75 billion 3.363% Notes due 2024
- $2.4 billion 3.700% Notes due 2027
- $1.5 billion 4.669% Notes due 2047
- Euro-denominated Notes Offering: BD entered into an agreement to sell €700,000,000 of 0.368% Notes due 2019.
Material Changes and Use of Proceeds
The primary material change is the restructuring of BD's debt profile to finance the Bard Acquisition and refinance existing obligations.
- Acquisition Financing: Net proceeds from the 2020, 2022, Floating Rate, 2024, 2027, and 2047 U.S. Notes, along with other liquidity sources, are designated to finance the cash consideration for the Bard Acquisition.
- Debt Refinancing: Net proceeds from the 2019 U.S. Notes and the Euro Offering, combined with cash on hand, will be used to redeem various series of BD's outstanding senior notes.
- Redemption Contingency: If the Bard Acquisition is not consummated by April 23, 2018, or if the merger agreement is terminated prior to that date, BD is required to redeem the 2020, 2022, Floating Rate, 2024, 2027, and 2047 Notes at 101% of their aggregate principal amount plus accrued interest. The 2019 Notes are exempt from this mandatory redemption provision.
Guidance, Outlook, and Risks
BD expects the U.S. and Euro Offerings to close on or about June 6, 2017, subject to customary conditions. The closing of the U.S. Offering is not conditioned on the closing of the Bard Acquisition.
Risks and Uncertainties: The filing highlights several forward-looking risks, including:
- The ability to successfully complete the Bard Acquisition on anticipated terms and timing.
- The ability to consummate the U.S. and Euro Offerings.
- General market and regulatory factors affecting the transaction.
Investors are urged to read the definitive proxy statement/prospectus (Form S-4) for Bard, which was filed on May 23, 2017, for comprehensive details on the transaction.
Key Facts for Investor Verification
- Verify the final closing date of the U.S. and Euro Offerings, currently expected around June 6, 2017.
- Monitor the status of the Bard Acquisition to determine if the mandatory redemption of specific U.S. Notes (2020-2047) will be triggered by the April 23, 2018 deadline.
- Review the definitive proxy statement/prospectus (Form S-4) for Bard to understand the full terms of the merger and voting requirements.
- Confirm the specific series of BD's outstanding senior notes that will be redeemed using the proceeds from the 2019 Notes and Euro Offering.